The Long Wait for Innovation

In August of 1998, Dr. Michael J. Heller, a founder of San Diego-based Nanogen Inc., applied for a patent on a method he and a colleague discovered for synthesizing molecular structures.

In early 2008, after more than nine years and tens of thousands of dollars in costs, the U.S. Patent and Trademark Office finally approved the patent. The belated approval didn't end up doing much good for Nanogen.

The company, which used nanotechnology in medical diagnostics, filed for bankruptcy in May of this year, and laid off 89 employees in June.

It is highly doubtful that the patent — had it been awarded in a more timely fashion — would have in itself saved the company from bankruptcy. But it certainly could have helped, said Heller, who left the company several years ago and is now a professor of bioengineering at the University of California, San Diego's Jacobs School of Engineering.

"There is no question that it hurts — it is just taking too long and too much money," he said. "When you are in the high-tech arena you have to get your stuff patented early. You wait too long and everyone will end up knowing the technology."

Nanogen's experience is just one example of how the process of getting a patent is now longer and more drawn out than it ever has been. A voiceofsandiego.org analysis of more than 1,500 patents awarded to individuals and entities in San Diego County last year showed that inventors had, on average, a three-and-a-half year wait from the time they applied for a patent until they got it. That is twice as long as the 18-month benchmark that the patent office has historically set for itself.

All told, 285 San Diego County patents issued in 2008 were approved more than five years after their application date, according to the data provided by Wisconsin-based Telaric Ideas. Nanogen was among nine local applicants that waited more than nine years for their patents, with the longest wait being 14.9 years by vaccine maker Pharmexa, according to the data.

San Diego County's situation is not unique. An analysis by the Milwaukee Journal-Sentinel showed that the average wait period for all patents issued by the Patent Office was almost identical to San Diego's. All told, 191 patents issued in 2008 took 10 years or more to be approved, and one, for a supersonic space vehicle, took 27 years from application to approval, according to the Journal-Sentinel analysis.

The impact of the long waits for patents goes beyond the scores of inventors who have lost their patience, say advocates for a quicker process of issuing patents. They argue that having so many innovations in limbo not only curtails job creation and economic growth in general, but also does damage to the United States' competitiveness in the global economy as other countries become more adept at developing new technology.

And, they say, economies that are largely innovation based — like San Diego's — are especially at risk when the patent system bogs down.

"It's gone from being a sore spot to an open wound," John Wetherell, a local patent attorney, said of the slow approval rate. "Entrepreneurship is one of San Diego's greatest assets, and it is being eroded because of this."

There are others who caution that the pendulum may swing too far the other way and make the issuing of patents a rubber-stamp process that would be good for lawyers like Wetherell, but not for consumers.

And to be sure, for every patent that protects a revolutionary invention like Qualcomm's cell phone chips, there are many that have little or no commercial viability.

But in an economy like San Diego's, home to hundreds of technology start-up companies, the timeliness of patent protection is a crucial issue. In many cases a small company that was founded around a new technology counts its patent portfolio as its primary asset. This company would have a hard time finding investors unless it can prove that the technology is safe from competition in the early going.

Local angel investor Jack Florio said patent protection is particularly important to biotechnology companies because technologies and chemical compounds that are effective in treating disease are hard to come by, but can be easy to copy.

"If we are putting in two years of money, we need to know that the intellectual property will be clean in two years," Florio said.

Also working against these companies is the fact that the life of a typical patent is 20 years, and that the Patent Office makes patent applications public after 18 months, even if they haven't yet been read by an examiner. So when the system bogs down, a window that many say is already too small gets smaller.

In Nanogen's case, competitors had nearly seven years to examine the application filed by Heller and Eugene Tu. "People had all this time to see what we were doing and think of ways to go around it — find ways to read off of it and make a better invention," Heller said.

And while the patent application is available to everyone, the applicants are racking up tens of thousands dollars in costs, which include fees charged by the Patent Office, as well as fees that patent lawyers charge to file the application and keep it alive. When it is all said and done, one patent can easily cost a company $50,000, Wetherell said.

Officials throughout the federal bureaucracy, including those in the Patent Office, acknowledge the problem. U.S. Commerce Secretary Gary Locke addressed it during last month's swearing in ceremony of new Patent Office chief David Kappos.

"Put simply, it takes too long for inventions and new ideas to get intellectual property protection," Locke said. "This has a direct, negative impact on America’s economic competitiveness — creating uncertainty for entrepreneurs and inventors."

Locke said the Patent Office is pursuing the "extremely aggressive" goal of doing an initial examination of a patent within 10 months. Right now that action can take as long as two years, say inventors. However, while they shoot for this goal, Patent Office officials say budget cuts have forced a significant hiring slowdown in the already thin ranks of patent examiners.

The Journal-Sentinel investigation found that more than 1.2 million applications are awaiting approval — nearly triple the amount from 10 years earlier. And since 1992 Congress has diverted $792 million in patent fees to federal programs that have nothing to do with patents, the newspaper reported.

There are those, however, who worry that officials will end up overcorrecting the problem, and patents will become too easy to get and lead to undeserved monopolies on technology. Dan Ravicher, executive director of the New York-based Public Patent Foundation, said those like Wetherell, who are pushing the hardest to streamline the patent approval system, stand to benefit the most.

"Patent attorneys make a lot more money off the issuance of patents than the patent office does," Ravicher said. "It is bad for (a patent attorney's) business when patents are being approved at a slow rate, and it is good for business when they are being rubber stamped."

In August of 1998, Dr. Michael J. Heller, a founder of San Diego-based Nanogen Inc., applied for a patent on a method he and a colleague discovered for synthesizing molecular structures.

In early 2008, after more than nine years and tens of thousands of dollars in costs, the U.S. Patent and Trademark Office finally approved the patent. The belated approval didn’t end up doing much good for Nanogen.

The company, which used nanotechnology in medical diagnostics, filed for bankruptcy in May of this year, and laid off 89 employees in June.

It is highly doubtful that the patent — had it been awarded in a more timely fashion — would have in itself saved the company from bankruptcy. But it certainly could have helped, said Heller, who left the company several years ago and is now a professor of bioengineering at the University of California, San Diego’s Jacobs School of Engineering.

“There is no question that it hurts — it is just taking too long and too much money,” he said. “When you are in the high-tech arena you have to get your stuff patented early. You wait too long and everyone will end up knowing the technology.”

Nanogen’s experience is just one example of how the process of getting a patent is now longer and more drawn out than it ever has been. A voiceofsandiego.org analysis of more than 1,500 patents awarded to individuals and entities in San Diego County last year showed that inventors had, on average, a three-and-a-half year wait from the time they applied for a patent until they got it. That is twice as long as the 18-month benchmark that the patent office has historically set for itself.

All told, 285 San Diego County patents issued in 2008 were approved more than five years after their application date, according to the data provided by Wisconsin-based Telaric Ideas. Nanogen was among nine local applicants that waited more than nine years for their patents, with the longest wait being 14.9 years by vaccine maker Pharmexa, according to the data.

San Diego County’s situation is not unique. An analysis by the Milwaukee Journal-Sentinel showed that the average wait period for all patents issued by the Patent Office was almost identical to San Diego’s. All told, 191 patents issued in 2008 took 10 years or more to be approved, and one, for a supersonic space vehicle, took 27 years from application to approval, according to the Journal-Sentinel analysis.

The impact of the long waits for patents goes beyond the scores of inventors who have lost their patience, say advocates for a quicker process of issuing patents. They argue that having so many innovations in limbo not only curtails job creation and economic growth in general, but also does damage to the United States’ competitiveness in the global economy as other countries become more adept at developing new technology.

And, they say, economies that are largely innovation based — like San Diego’s — are especially at risk when the patent system bogs down.

“It’s gone from being a sore spot to an open wound,” John Wetherell, a local patent attorney, said of the slow approval rate. “Entrepreneurship is one of San Diego’s greatest assets, and it is being eroded because of this.”

There are others who caution that the pendulum may swing too far the other way and make the issuing of patents a rubber-stamp process that would be good for lawyers like Wetherell, but not for consumers.

And to be sure, for every patent that protects a revolutionary invention like Qualcomm’s cell phone chips, there are many that have little or no commercial viability.

But in an economy like San Diego’s, home to hundreds of technology start-up companies, the timeliness of patent protection is a crucial issue. In many cases a small company that was founded around a new technology counts its patent portfolio as its primary asset. This company would have a hard time finding investors unless it can prove that the technology is safe from competition in the early going.

Local angel investor Jack Florio said patent protection is particularly important to biotechnology companies because technologies and chemical compounds that are effective in treating disease are hard to come by, but can be easy to copy.

“If we are putting in two years of money, we need to know that the intellectual property will be clean in two years,” Florio said.

Also working against these companies is the fact that the life of a typical patent is 20 years, and that the Patent Office makes patent applications public after 18 months, even if they haven’t yet been read by an examiner. So when the system bogs down, a window that many say is already too small gets smaller.

In Nanogen’s case, competitors had nearly seven years to examine the application filed by Heller and Eugene Tu. “People had all this time to see what we were doing and think of ways to go around it — find ways to read off of it and make a better invention,” Heller said.

And while the patent application is available to everyone, the applicants are racking up tens of thousands dollars in costs, which include fees charged by the Patent Office, as well as fees that patent lawyers charge to file the application and keep it alive. When it is all said and done, one patent can easily cost a company $50,000, Wetherell said.

Officials throughout the federal bureaucracy, including those in the Patent Office, acknowledge the problem. U.S. Commerce Secretary Gary Locke addressed it during last month’s swearing in ceremony of new Patent Office chief David Kappos.

“Put simply, it takes too long for inventions and new ideas to get intellectual property protection,” Locke said. “This has a direct, negative impact on America’s economic competitiveness — creating uncertainty for entrepreneurs and inventors.”

Locke said the Patent Office is pursuing the “extremely aggressive” goal of doing an initial examination of a patent within 10 months. Right now that action can take as long as two years, say inventors. However, while they shoot for this goal, Patent Office officials say budget cuts have forced a significant hiring slowdown in the already thin ranks of patent examiners.

The Journal-Sentinel investigation found that more than 1.2 million applications are awaiting approval — nearly triple the amount from 10 years earlier. And since 1992 Congress has diverted $792 million in patent fees to federal programs that have nothing to do with patents, the newspaper reported.

There are those, however, who worry that officials will end up overcorrecting the problem, and patents will become too easy to get and lead to undeserved monopolies on technology. Dan Ravicher, executive director of the New York-based Public Patent Foundation, said those like Wetherell, who are pushing the hardest to streamline the patent approval system, stand to benefit the most.

“Patent attorneys make a lot more money off the issuance of patents than the patent office does,” Ravicher said. “It is bad for (a patent attorney’s) business when patents are being approved at a slow rate, and it is good for business when they are being rubber stamped.”